Bangsaphan Barmill Plc made a second-quarter net profit of Bt103.3 million compared with a net loss of Bt133.98 million in the same period a year ago, thanks to handsome gains from inventory sales.

The sharp and rapid increase in world steel prices gave the company a favourable margin in its sales of steel bars, which had been produced from previously acquired lower-cost billets, deputy managing director Veerawit Tulalamba said in a filing with the Stock Exchange of Thailand yesterday.

Bangsaphan showed robust quarterly earnings, despite a 21-per-cent year-on-year drop in its sales volume to 54,386 tonnes, and a 22-per cent decline in revenue from Bt1.24 billion to Bt966 million.

Sluggish global and domestic steel trade was blamed for the lower sales volume.

Apart from the improved margin, a lower foreign-exchange loss and the absence of a loss on asset appraisal boosted the quarterly earnings.

The company in the second quarter had a Bt1.6 million loss on exchange, compared with a combined Bt76.7 million loss on exchange and assets appraisal in the corresponding period last year.

Profit before interest in the second quarter accounted for 11.2 per cent of revenue, up from 7 per cent in the previous quarter and down 9.5 per cent from the same period last year.

The improved profit before interest was the result of a higher earnings-before-interest margin, as well as a saving on interest costs - which accounted for only 0.3 per cent of revenues - by using less credit from banks to finance working capital.

In the first half of the year, Bangsaphan's net profit rose a whopping 608 per cent from Bt25 million in the same period last year, to Bt177 million.

Veerawit said the board had decided to pay an interim dividend of Bt0.10 per share for its first-half performance. Payment will be made on September 4.

Given the solid net-profit report, Bangsaphan's stock surged yesterday by more than 13 per cent to close at Bt1.45.

Kim Eng Securities (Thailand) said it was maintaining a "Hold" rating on the stock, despite the impressive second-quarter earnings.

The broker forecast that Bangsaphan's second-half earnings will be significantly weaker as a result of higher billet costs and the slowdown in construction activity.

Sales volume, it said, would be low in the second half and this

is likely to continue into next

year.

The broker has maintained its target price for the stock at Bt1.40.

Bangsaphan's affiliate Sahaviriya Steel Industries Plc also made a stunning gain in net profit in the second quarter, jumping from Bt989.27 million to Bt1.55 billion year on year.